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Breaking through the 8,500-barrier for the first time, FTSE 100 stocks hit an all-time high on Friday (17 January).
On one level, this seems a little strange. UK growth figures continue to disappoint, with the economy flatlining since April 2024. In addition, inflation remains above the Bank of England’s 2% target. And earlier this month, yields on 30-year government bonds hit a 26-year high.
Things appear to have got so bad there’s even speculation that the Chancellor might have to call an emergency budget to address another ‘black hole’ in the nation’s finances.
It really does seem very gloomy out there!
And yet the UK’s largest listed companies now attract a higher valuation than ever before.
What’s going on?
In my opinion, this optimism reflects the global nature of the FTSE 100.
It’s true that the UK economy isn’t going ‘gangbusters’ at the moment. But it’s estimated that 75% of the revenue of the companies in the index is earned overseas.
This means they aren’t reliant on one particularly territory and are less affected by one set of economic indicators.
In contrast, the more domestically-focused FTSE 250 remains 15% below its all-time high, achieved in September 2021.
And the best performer on the FTSE 100 over the past month, illustrates this point.
Doing nicely
Since 17 December 2024, shares in Airtel Africa (LSE:AAF) have risen 17%. And the secret to its recent success could be that the group doesn’t earn any revenue outside Africa. The threat of ‘Trump’s tariffs’ isn’t going to affect the group.
At 30 September 2024 (H1 25), it reported 156.6m customers in 14 countries, an increase of 6.1% from a year earlier.
During H1 2025, revenue was 19.9% higher. However, this was calculated using a fixed exchange rate (constant currency). Actual revenues were 9.7% lower, particularly due to the weak performance of the Nigerian naira.
Volatile exchange rates do illustrate one of the difficulties of doing business in this part of the world. It’s also a highly competitive sector and the necessary infrastructure can be expensive.
But despite these risks, the company’s attracting the interest of a major investor. On 27 December 2024, an entity closely connected with one of the company’s non-executive directors, Shravin Bharti Mittal, bought £15.75m of shares. It now brings the stake of Indian Continental Investment to just under 16%.
And in the telecoms industry, Africa seems like the place to be at the moment. During H1 2025, Vodafone – which derives 20% of its revenue from the continent – reported a 9.9% increase in its service revenue in the region.
Over the long term, economic growth in Africa is likely to outpace the rest of the world. And as incomes rise, consumers are likely to have more to spend on things like mobile phones.
Good news
As someone who mainly owns FTSE 100 stocks, I welcome the new high. But I’m not getting too carried away. I think the stocks in the index most likely to do well over the next 12 months are those that are less reliant on the UK economy, like Airtel Africa.
But as much as I think the group’s in a good position to benefit from the anticipated growth on the continent, I already own shares in Vodafone and don’t want more exposure to the sector.
